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Minimize Income Taxes on 401k Distribution

Minimize Income Taxes on 401k Distribution

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We are in the process of purchasing a second home to be used for winter vacation purposes.  We may also rent the home for part of the year.

In order to do this we plan to take > $150,000 from our 401k accounts to pay cash for the home.  If I understand tax laws properly, this $150,000 will be subject to both federal and state income taxes in the neighborhood of > $30,000.

Is there a way to avoid paying this income tax?  In effect we are changing our investment portfolio by moving $150,000 from our 401k into an asset I call 2nd home.

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By Bob Smith
Jun 25th 2015 20:12 EDT

Quit your job, take a vacation, roll over the 401(k) into the IRA, set the property up as a real estate asset in an IRA .... have your bosses rehire you. down side...maybe they don't want you back.

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